Media Still Taking Their Queues from Wall Street

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What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comment: If you read the mainstream media instead of the actual complaints being filed by agencies and consumers, you get the message that it is foreclosures that are dragging the economy down because of how slow they are in judicial states. They present a compelling case consisting of half truths about diminishing property values, lower lending, overwhelming servicer capacity, resistance to modifications, and delays in the “inevitable” foreclosure caused by judicial backlog.

The message is clear — let’s get this over with and move on with our economic recovery. With consumer purchasing weakening and the threat of huge lawsuits against the banks that caused this mess, the spin is that if we just forget about the whole mess, everyone would be better off.

My message is that the foreclosure mess is the result of compounded fraud, Ponzi schemes and unethical behavior by the Wall Street banks — and that the victims of that fraud deserve restitution just like any other fraud case.

Those victims include almost every part of the economy but the focus is on investors (pension funds providing lifeblood to people on fixed incomes) and homeowners who were coerced, enticed and deceived by the values used at their loan closing certified by appraisers who under threat of coercion (never working again) gave the banks the values as instructed.

Both sides of the transactions — the investors who loaned their money and the homeowners who borrowed money were deceived and economically devastated by the same lies and false documentation created to give the appearance of a proper mortgage-backed bond, a proper mortgage and then a proper foreclosure.

None of it was true. The bets were made against those mortgages because the banks knew the loans were bad and that even if they were not bad, they had unconditional power (through the Master Servicer) to declare that the “pool” was impaired. The fact that the pool was never funded and never received any of the loans escaped the attention of most people.

Neither the investors nor the homeowners ever had a chance. And the “burden” now placed on the banks of coughing up hundreds of billions (trillions) of dollars for their fraudulent behavior is said to endanger our economy. My message is that the economy, the dollar and our standing in the world is far more endangered by letting it be known that if your fraud is big enough you will never be prosecuted. It creates an uncertainty in the marketplace where trust and reliance on such checks and balances as appraisers and rating agencies is used as a principal measure as to whether to get involved in a deal.

If the banks were using the investor (pension) money, why did the banks get the bailout and other  forms of relief totaling more than all the mortgage loans put together, whether “in default” or or completely current in payments? Why didn’t that money go to the investors and the resulting credit inure to the borrowers whose loans were improperly priced by fraudulent and deceptive means?

My message is that the economy will recover far more quickly when people recognize that the government and the judicial system requires that everyone play by the same rules. If you have a case, then prove it. That is why I keep harping on Deny and Discover as the principal strategy for foreclosure and mortgage litigation.

The facts are that most of the loans were bad — defective as to who they named as payee on a loan the borrower never received, and defective as to the principal due based upon fraudulent appraisals. The borrowers received loans from third parties in table funded loans that were not only not disclosed, they were hidden from the borrower and the source of the loan money, the investors (pension funds).

The loans that were funded were undocumented intentionally because the banks wanted a window of time within which they could claim the loans were the asset of the bank instead of the investors. The documentation enabled the banks to pretend to be the lender and therefore reap the benefits of large bets against loans that increasingly were doomed from the start. After they made their money they pitched the loans, contrary to the express terms of the Pooling and Servicing Agreement, over the fence and told the investors that THEY had lost money while the banks had made trillions of dollars.

The reason why foreclosures proceed more slowly through those states requiring a judicial process is that the banks don’t have the goods. Most of the loans were never funded by the party whose name was placed on the note and mortgage. And it is no different but easier to circumvent in the non-judicial states.

The borrowers, completely ignorant of what was done to them at closing and completely ignorant of the trillions paid on the loan liability and received by the banks assume that they owe the amount demanded by the bank — when in fact the overpayment received by the banks as agent for the investors might well be an overpayment that is due back to the borrower after the investor is paid.

The only reason things that gone so far astray is that the bank strategy is working — blame the borrower and admit to some negligence and some paperwork problems. But forgery, robo-signing, powers of attorney, false endorsements, false beneficiaries, false substitutions of trustees and false affidavits are not “paperwork problems.”

False documents would not be necessary if the loans were real secured loans in a real fair and free market. If the investors and borrowers knew what was really being done with the documents and the money, they never would have entered the deal in the first place.

These are crimes that should be prosecuted. THEN the economy will recover when restitution is given to investors and homeowners, the banks assets are written down to true market value (excluding loans they never funded or purchased).

PRACTICE TIP: Attack the lien first without regard to the outstanding obligation to avoid appearing that you are seeking a “free house.”

Don’t limit your Discovery to the Subservicer. You are only getting a small slice of the pie of the information that way. Demand the same discovery from the Master Servicer and the “Trustee” of the “trust.”

Only the Master Servicer has access to information regarding third party payments. And only the Investment Banker (the brokerage that sold the bogus mortgage bonds) can account for the bets they made using insurance and credit default swaps.

And don’t forget to ask the Trustee why the “trust” was not administered through their trust division or trust subsidiary. You might well find that that no trust account was ever created for the trust and that the “trustee” did not administer the affairs of the trust because there was nothing to administer and the trustee’s powers are claimed by Deutsch, Mellon, and U.S. Bank to actually be that of agent rather than trustee with fiduciary responsibility — when it comes time to assess damages against the losing pretender lender.

Upshot of the Foreclosure Backlog

Mortgage Meltdown: Paulson is wrong on bailout

Paulson’s comments yesterday were inappropriate. He just doesn’t get it. He is arguing for hitting the iceberg and then let the deadly water take care of the problem. The ship is the American economy. And the waters are a legal system that assumes, all things being equal, that the process of foreclosure, eviction and losses on CDO investments will eventually find a state of equilibrium from which the economy will rebound. He is wrong.

All things are not equal because of the scale of losses, the scope of the economic effects, and the deadly despair descending upon the American consumer in a consumer driven economy. Take away the spending of consumers, and the United States is a third world economy. Maybe it doesn’t need to be that way, but it is now. 

On the other hand he is right in one respect — that a bailout, using federal funds, will not alone solve the problem. More fiat funds pushed into a marketplace where the dollar is already declining in a virtual free fall will cause problems of its own — continuing devaluation of the U.S. dollar, other countries severing their currency ties with the dollar, a huge increase in U.S. debt, spiraling inflation at a level not seen before in our lifetimes, and a sea-change in life-style as virtual ghost towns dot the landscape consisting of abandoned homes. 

The answer is a combination of remedies and rewriting the rules so all things ARE equal. A relatively small Federal bailout along the lines of the Barney Frank proposal will provide some breathing room. 

Republicans and Democrats need to get together under the leadership of their standard bearers in this election year and refuse to pass any legislation for funding or otherwise until this credit crisis is addressed in an immediate comprehensive way. 

Federal and state agencies and judicial systems, should bend their rules as much as possible to provide a de facto moratorium on foreclosures and evictions — re- routing cases into mediation procedures and providing for mediation reports in 90 days before the cases can continue.

Attorney Generals of each state should intervene in each foreclosure case, basically alleging that the lender participated in a vast conspiracy to defraud the borrower and with reckless disregard to the damage their behavior would cause to the economy of the state and the nation, not to speak of cities in other countries who are now decreasing social services because the cash they thought they had evaporated with the diminution of value “Safe” “cash equivalent” CDO investments they thought they had. 

See the previous post, for details plans on remedial legislation which Congress and each of the states can pass to aggressively put down this crisis. If Federal authorities fail to act, then states, individually and collectively should encourage their state chartered banks to start issuing bank notes as an alternative to U.S. currency. Agreements with Forex and precious metals traders should be reached to back up these new currencies. A radical solution to a radical problem. Failure to act will leave every American citizen bereft except those who are already taking hedge positions in foreign exchange and precious metals and other commodities. 

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